Correlation Between Electricity Generating and Super Energy

Can any of the company-specific risk be diversified away by investing in both Electricity Generating and Super Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Electricity Generating and Super Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electricity Generating Public and Super Energy, you can compare the effects of market volatilities on Electricity Generating and Super Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Electricity Generating with a short position of Super Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electricity Generating and Super Energy.

Diversification Opportunities for Electricity Generating and Super Energy

0.14

Correlation Coefficient

Electricity Generating  Super Energy

Average diversification

The 3 months correlation between Electricity and Super is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Electricity Generating Public and Super Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Energy and Electricity Generating is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Electricity Generating Public are associated (or correlated) with Super Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Energy has no effect on the direction of Electricity Generating i.e., Electricity Generating and Super Energy go up and down completely randomly.

Pair Corralation between Electricity Generating and Super Energy

Assuming the 90 days trading horizon Electricity Generating Public is expected to generate 0.18 times more return on investment than Super Energy. However, Electricity Generating Public is 5.48 times less risky than Super Energy. It trades about -0.2 of its potential returns per unit of risk. Super Energy is currently generating about -0.13 per unit of risk. If you would invest  11,507  in Electricity Generating Public on December 27, 2024 and sell it today you would lose (2,082) from holding Electricity Generating Public or give up 18.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Electricity Generating Public  vs.  Super Energy

Electricity Generating

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electricity Generating Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Super Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Super Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Electricity Generating and Super Energy

The main advantage of trading using opposite Electricity Generating and Super Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electricity Generating position performs unexpectedly, Super Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Super Energy will offset losses from the drop in Super Energy's long position.

The idea behind Electricity Generating Public and Super Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.